Safe Domain Name Transactions

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After reading an excruciatingly long thread on DNForum that deals with allegations of scamming, stolen domain names, missing funds…etc, I wanted to share some general advice when buying and selling domain names. The advice I give is only based on how I personally do business, and I recommend using an attorney if that makes you more comfortable.
Before I purchase a domain name, I always check the Whois history to make sure the name looks like it is free and clear of problems. Frequent changes in ownership, different/inconsistent email addresses or phone numbers, and incorrect-sounding information always ring bells in my head and requires further checking. I also like to search using Google and the domain forums to see if the name has ever been in a dispute or had “issues.” Because I mostly acquire names after I send an email to the owner, I generally feel more comfortable buying domain names, but issues can still arise. If I get a bad gut feel about something, I don’t go through with a transaction – it’s not worth the trouble.
When I purchase a domain name, I almost always use a domain purchase agreement I had created by an attorney. Sometimes I add confidentiality language, but for the most part, it’s a standard agreement that I modify depending on the unique attributes of the sale. The agreement basically states the name of the owner (based on Whois and Whois history), that the owner has the right to sell the name, the name is free and clear of encumbrances and legal troubles. Boiled down, I want to make sure the owner has the right to sell the name and I won’t face any new legal issues down the road.
When buying from someone I don’t know well or from someone who would prefer an added layer of security, I use an escrow service. In the past, I have used Escrow.com, Moniker, Sedo, Afternic and a private attorney to handle escrow for me. It really depends on the seller for this, as I trust all of the above escrow services, and I want the seller to be assured that he will be paid. As far as I am aware, all of these services allow various forms of payment to make an easy transaction. I believe Escrow.com is the only service that doesn’t require the seller to transfer the domain name to them for their review.
I like paying via Paypal, but that isn’t always the safest or most cost effective method. In fact, I will generally only pay by Paypal for small domain purchases if I know the seller (or buyer if I am accepting it). While Paypal is generally the quickest way to accept payment, there can be little recourse if a domain name isn’t transferred or other issues arise since domain names aren’t tangible items.
While I don’t always use a sale or purchase agreement with clients I know, I always use one when I purchase a domain name from someone I don’t know. While they may not protect me from all everything, I believe using one is much smarter than not using one. The best advice I can offer is that if you have your mind set on a particular domain name, and you have any concerns about the transaction, I recommend that you retain the services of an attorney like John Berryhill or Brett Lewis to handle the transaction. With new scams popping up every day, protecting your domain names and your assets are vital.

1 COMMENT

  1. Great summary, Elliot. One point on:
    “I believe Escrow.com is the only service that doesn’t require the seller to transfer the domain name to them for their review.”
    Afternic is the same as Escrow.com, you just transfer directly to the buyer.

  2. This article is a great “general” reference for domain buyers and sellers alike.
    Honesty & Trust are the key to business Success – KNOW YOUR SELLER / Buyer

  3. Elliot, have you ever had a situation where you signed your purchase agreement with a seller and then later found out that the domain was in dispute, got sued etc? I presume you would claim that the seller is responsible for the dispute, bad business etc?

    ***UPDATED BY ELLIOT***
    I don’t want to jinx myself, but I have had pretty good luck with my transactions. I think you really need to do your homework and not just rely on the previous domain owner or buyer.

  4. Thanks for the advice, Elliot. You are very cautious, as you should be. Would you be willing to post the domain purchase agreement that you use (just a template I mean, without any personal info)? I think it would be a huge help to many domainers.

    ***UPDATED BY ELLIOT***
    I don’t think I can legally do that since I bought it from a domain attorney, and I am not sure I have the rights to distribute it.

  5. I second ‘DomainerPro’s’ request. Sure many of us would appreciate a general template we could re-work as needed for each transaction. Thanks!

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